Hong Kong’s carrier Orient Overseas Container Line (OOCL) managed to return to profit in the first half of 2017 posting USD 53.6 million, compared to a loss of USD 56.7 million seen a year earlier.
The company’s gross revenue reached USD 2.89 billion for the six-month period ended June 30, 2017, up from USD 2.56 billion reported in the same period in 2016, while the group’s operating profit stood at USD 110 million, compared to an operating loss of USD 18.6 million seen in the previous year.
Compared to the first half of 2016, OOCL liner liftings increased by 7% and load factor by 1%. Revenue levels per TEU increased by 8%.
“In the first half of 2017, we have begun to see a slow and steady recovery from the tough market conditions that characterised 2016,” C C Tung, Chairman of OOIL, said, adding that “it seems that healthier demand growth has reappeared, at least to some extent.”
In tandem with this gradual improvement in demand, the supply side growth has witnessed a slowdown. Scrapping occurred at a record rate in 2016, continuing at approximately the same pace in 2017 year to date, while newbuilding orders have been “notably absent” so far this year.
“This steady improvement in the supply demand balance is not a sign of a booming market – we are far from that. However, it does mean that for the first time since the onset of the Global Financial Crisis, the supply demand balance is not worsening year on year. This is a significant shift, and if it holds, then the industry will at least have the chance to start to absorb some of the excess capacity that exists,” Tung informed.
Driven in part by the unsustainable markets of last year, but also being the continuation of a relentless trend towards scale and consolidation, the shape of the container shipping industry has changed dramatically. Following a wave of M&A, corporate reorganisations, a corporate collapse, and the change in alliance groupings implemented in April 2017, the industry continues to evolve, according to Tung.
“Over time, this may help to provide a more stable context for the industry, which is ultimately to the benefit of liner companies as well as of their customers,” Tung said.